Corporate Social Responsibility as differentiation from international competition

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School of Business, Economics and IT Division of Business Administration

Master Thesis, 15 HE credits in Business Administration

Corporate Social Responsibility as differentiation from international competition

A case study of the German book retailing sector

Degree Project in

Business Administration Spring term 2015

Author: Nicole Bulawa Supervisor: Ellinor Torsein

Examiner: Akbar Khodabandehloo

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Abstract/Summary

The aim of this research was to examine how differentiation from international competition can be reached through Corporate Social Responsibility and was conducted in cooperation with the Mayersche Buchhandlung, a German book retailer. This research was realized within the second semester of the Master of Science program in International Business and was written by Nicole Bulawa.

The problem that was addressed within this study is the exposure of the Mayersche Buchhandlung to international competition, such as Amazon. A problem solution was provided through an investigation of how the Mayersche Buchhandlung can improve their CSR practices in terms of a general CSR framework. This was supplemented through recommendations on how this can be communicated to customers taking the country-of- origin effect into account.

Research was conducted in accordance to a qualitative research strategy with focus on a single case study which facilitated the collection of in-depth information. Data was collected by means of secondary and primary data. More specifically, primary data were gathered through semi-structured interviews and website content which were analysed through qualitative content analysis. Within the first research question an examination of the integration of CSR within the company’s overall strategy took place as well as an investigation of CSR practices through a CSR framework. In accordance to research question two CSR communication in terms of general and online CSR communication was investigated. This took place in correspondence to the country-of-origin effect of Germany.

Data has been collected with reference to the integration of CSR within the company’s overall strategy which showed that the absence of a guiding CSR strategy for CSR practices. Furthermore, it also became evident that the company followed extensive CSR efforts with regards to all five CSR framework areas. Nevertheless, improvements covered aspects, such as certifications/awards of external parties, as it was a generally lacking aspect within the company. Furthermore, evidence showed that the company placed increasing focus on donations and sponsorship of community projects which were related to the company’s core business. In accordance to this study this emphasis could be improved through increased emphasis in this area.

Evidence with regards to general and online CSR communication showed similar patterns in which it became apparent that focus should be placed on differentiation as a communication objective. Furthermore, based on the data intensified usage of an emotional message appeal was suggested within the company’s CSR communication, general and online, because of the social character that CSR inherits. Lastly, increased storytelling with regards to myths and origins and hero stories within CSR communication messages was proposed as it communicates sympathy and a valuing of employees by the company. Lastly, the country-of-origin effect of Germany on CSR communication showed that social issues with different importance rankings in Germany have been addressed. Nevertheless, no evidence could be found for the country-of-origin effect of Germany on CSR communication as addressed social issues were related to the company’s profession and industry and not the country the company is located in.

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List of figures and tables

List of figures

Figure 1: Thesis outline……….7 Figure 2: Analysis model……….29

List of tables (Appendix) Appendix I research question 1

Table 1: Coding scheme………..16 Table 2: Analysis scheme with interview references………18

Appendix research question 2

Table 3: Coding scheme………125 Table 4: Analysis scheme with interview references………..………129 Table 5: Analysis scheme with website content………..……156

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List of abbreviations

- APCO: Association of Public-Safety Communications Officials - CSR: Corporate Social Responsibility

- E-commerce: Electronic Commerce

- EFQM: European Foundation for Quality Management - E- tailing: Electronic retailing

- HRM: Human Resource Management - ICC: International Chamber of Commerce - PR: Public Relations

- SMEs: Small- and medium sized enterprises - The EU: The European Union

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Introduction

Within this chapter a background to the research study is given which is followed by a problem discussion and research questions. Afterwards, the research purpose is explained as well as delimitations within this study. Lastly, an outline of the following chapters of the thesis is given.

1.1 Background

This Thesis was conducted in cooperation with the Mayersche Buchhandlung, the fourth largest book retailer in Germany (Buchhandel, 2013). The company was founded in 1817 and is a family-run business with headquarters located in Aachen, Germany (Mayersche- Buchhandlung, 2015a). The managing director of the company is Dr. Hartmunt Falter who occupies this position since 1992 (Mayersche-Buchhandlung, 2015b). The Mayersche Buchhandlung is a national operating company, which solely focuses on the German market with emphasis placed on the region of Nordrhein-Westfalen (Mayersche- Buchhandlung, 2015a). Its primary product range consists of books, e-books, audio books, movies, music and games. Currently, its business encompasses 40 book stores in the west of Germany as well as an online shop (Mayersche-Buchhandlung, 2015a). In 2013, the company realized a revenue of € 165 million (Statista, 2014). Great emphasis is placed on social and cultural engagement by the company which is realized through various activities and practices in the field of Corporate Social Responsibility. These range from philanthropy to social and local engagement (Mayersche-Buchhandlung, 2015c).

In general, a retailer can be defined as: “A business or person that sells goods to the consumer, as opposed to a wholesaler or supplier, who normally sell their goods to another business.” (Business-Dictionary, 2015). Even though, the Mayersche Buchhandlung is a local company as its business operations focus solely on the German market, the company faces not only domestic competition, but also international competition (Buchhandel, 2013). Competition in this sense means: “Rivalry between two or more businesses striving for the same customer or market.” (The-free-dictionary, 2015). This development is a result of the globalization of competition through which traditional national firms are confronted with fast-growing international competitors which have more possibilities in exploiting international opportunities in comparison to national firms (Doole and Lowe, 2012). A major international competitor could be identified as Amazon, a globally operating online retailer, which got ranked as one of the Fortune 500 companies (Amazon, 2015). Thereby, online retailing or electronic retailing can be defined as: “The sale of goods and services through the Internet. Electronic retailing, or e-tailing, can include business-to-business and business-to-consumer sales.”

(Investopedia, 2015). Amazon was founded in 1995 and has its headquarters located in Seattle, the U.S. In general, the company can be considered as a leader in e-commerce, which is also due to its very extensive product range offered through its online shop. Due to the scope of Amazon’s product offer ranging from books to electronic devices, the company also includes a similar product range like the Mayersche Buchhandlung. While Amazon aims at various target markets on a global level, it also focuses its operations on the German market (Amazon, 2015).

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According to Porter (1980, 1985, 1988) a company can pursue three possible competitive strategies which are cost leadership, focus and differentiation (Porter (1980, 1985, 1988) in (Vilanova et al., 2009)). A cost leadership strategy was not recommended, because books, the main product focus of the Mayersche Buchhandlung, are price bound on a national level. In addition, a focus strategy in which a company focuses on specific products and services is already given as the Mayersche Buchhandlung focuses its operations on the book retailing industry in which it is confronted with international competition. As a consequence, it was advisable to follow a differentiation strategy which differentiates the company’s products and services from its competition (Vilanova et al., 2009). A differentiation strategy uses a company’s strengths and skills as a way to differentiate a company from its competition, which is in this case of international nature.

Hereby, the basis of differentiation needs to be valued by customers as it provides reasoning for purchase decisions. Nevertheless, the basis for differentiation can be created on various bases, design, product or service features or image, among others (Hooley et al., 2004).

One way of differentiation is Corporate Social Responsibility or also referred to as CSR.

Several definitions of CSR can be found within the literature.

One definition is given by the European Union as: “… the concept that an enterprise is accountable for its impact on all relevant stakeholders. It is the continuing commitment by business to behave fairly and responsibly and contribute to economic development while improving the quality of life of the work force and their families as well as of the local community and society at large…”, (Mazurkiewicz, 2004 ,p.5).

CSR is often driven by economic, social and political drivers which are a combination of risks and incentives aimed at companies to improve their standards. A company’s adoption or improvement of CSR practices in order to reach competitiveness is considered to be an economic driver (Mazurkiewicz, 2004). In accordance to legitimacy theory, a branch of political economy theory, an organization attempts to be perceived as legitimate by outside parties. Hereby, legitimacy is a relative concept as it depends on the social system the company operates in as well on time and place. A crucial aspect within this theory is that what society knows or perceives about an organization is of main significance (Deegan and Unerman, 2006). As a consequence, CSR practices are not considered to be sufficient according to this theory if these are not communicated to outside parties. This goes in line with research conducted by Ligeti and Oravecz (2009) who considered CSR practices and their communication as inseparable as these are closely interrelated (Ligeti and Oravecz, 2009). Especially, if a company strives to achieve specific results, such as differentiation from international competition, it is crucial that communication is understood correctly by the audience (Doole and Lowe, 2012). This view was supported in this study as CSR practices can only be used as a tool of differentiation, if customers are aware of them.

Research in the area of CSR developed over several decades in which the concept of CSR developed from a minor consideration to a diverse aspect in corporate decision making.

The discussion started with considerations regarding manager’s responsibility towards shareholders and society as a whole and developed to a multifaceted concept due to various external pressures and developments over the years (Cochran, 2007). Nowadays, a lot of research has been conducted with regards to CSR and company performance outcomes. While a positive relationship between these two constructs is generally acknowledged, it still remains a poorly understood aspect within research. Based on this,

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there is still an ongoing debate on how and under what conditions CSR influences company performance. Therefore, various frameworks were proposed within this field, such as research by Vilanova et al. (2009) who examined the nature of the relationship between CSR and competitiveness or research conducted by Kemper et al. (2013) who also focused on competition-motivated Corporate Social Responsibility (Kemper et al., 2013, Vilanova et al., 2009). A specific field that developed within this area was termed strategic CSR through which firms compete and achieve higher sales through CSR. One of its main assumptions lies in the easy integration of CSR in a company’s differentiation strategy. Key papers in this field could be identified as Baron in 2001, McWilliams and Siegel in 2001 and Bagnoli and Watts in 2003 (McWilliams and Siegel, 2010, Siegel and Vitaliano, 2007).

Another area in which consensus is lacking, is the definition of CSR, which determines what CSR encompasses. Various definitions exist among researchers and institutions, but no conformity exists. This is based on different perceptions among the private sector, social institutions and researchers (Mazurkiewicz, 2004). Furthermore, there is an ongoing concern regarding CSR as no commonly approved CSR framework exists which would cover various aspects and provides a comprehensive frame for companies. The development of one coherent CSR framework would make it possible to evaluate CSR practices accordingly (Gjølberg, 2009). Currently, various big initiatives prevail which often leads to the adoption of separate components by companies instead of the adoption of one coherent framework (Mazurkiewicz, 2004).

In addition, a specified branch of CSR research developed which focused on CSR practices and issues in the retail sector. Within these studies direct and indirect environmental impacts were identified as well as possible modes of action. Examples are, for instance, Robinson (2007) who highlighted numerous modes of actions in the area of sustainability or a study conducted by Thompson (2007) with focus on the environmental friendliness of retail space itself (Martinuzzi et al., 2011). Nevertheless, other studies also acknowledged that big improvements can still be conducted among the world’s biggest retailers, such as Lai et al. (2010) (Martinuzzi et al., 2011). In addition, the EU Commission also discussed several problems which might be faced during the development of a sustainable retail sector. This has been highlighted in a report of 2009 with a focus on high energy consumption, lack of a common life-cycle approach concerning the environmental impact of products and services and a shortfall in consideration of environmental costs which occur in the supply chain (Martinuzzi et al., 2011).

Extensive research has also been conducted in the field of CSR communication, especially, over the last decade. Therefore, it is a quite diverse research area which uses various theories and approaches within CSR communication theory (Ziek, 2009).

According to Fifka (2012), the number of papers regarding annual reports, CSR reports and online CSR communication increased over the last years due to changes in CSR practices which shifted towards the use of these communication media. The communication of CSR practices via web sites has been examined by various researchers, such as Chapple and Moon (2005), Chaudhri and Wang (2007) and Chen and Bouvain (2009) (Castelo Branco et al., 2014). In addition, an increasing area of CSR communication examined country specific communication practices or compares CSR communication practices among several countries (Castelo Branco et al., 2014). Birth et al. (2008) examined Switzerland’s top 300 companies CSR communication (Birth et al., 2008), while research conducted by Nielsen and Thomsen (2009) investigated CSR

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communication in Danish SMEs (Nielsen and Thomsen, 2009). Within this field the country-of-origin and culture are considered to be important determinants of CSR communication.

In general, the amount of research in both areas, CSR communication via online media and CSR communication considering country-of-origin effects, increased over the past years. Nevertheless, only limited evidence with respect to CSR communication in consideration of the German country-of-origin effect could be found. Research in this area which was placed in other contexts was, for instance, conducted by Adelopo et al.

(2012), Gill et al. (2008) and Maignan and Ralston (2002). While Adelopo (2012) found CSR communication to be less sensitive towards country-of-origin, research conducted by Gill et al. (2008) and Maignan and Ralston (2002) found support for country-of-origin implications on CSR communication (Castelo Branco et al., 2014).

1.2 Problem discussion

In this part an insight is given into what constitutes the problem, why and for whom is it a problem and lastly, how the problem can be solved.

The problem is based on the fact that the Mayersche Buchhandlung faces international competition, such as Amazon which aims at the same target market in Germany (Buchhandel, 2013). Therefore, a decrease in customers and sales numbers can take place.

Hereby, an important aspect in the area of book retailing is that books are price bound in Germany which means that companies can only compete in non-price factors. Therefore, significant emphasis is laid on the total service offer provided by companies in the book retailing industry (Wirtschaftswoche, 2011). Additionally, the problem is enhanced as international operating companies have more opportunities and advantages due to their size and diverse operations (Doole and Lowe, 2012) which makes a national operating company like the Mayersche Buchhandlung less competitive.

It is a problem as an increase in Amazon’s market share leads to a decrease in the Mayersche Buchhandlung’s market share, which results in lower revenues for the company. This problem is not only faced by the Mayersche Buchhandlung, but also by other national operating book retailers in Germany as they are in the same business situation (Buchhandel, 2013). Additionally, it also affects local German communities, because local businesses account for a big share of the local economy (Martinuzzi et al., 2011). In fact, in 2009 one fifth of all non-financial business enterprises in the EU belong to the retail sector occupying 17.5 million people in the EU (Martinuzzi et al., 2011).

A solution to the problem was provided through an investigation of how the Mayersche Buchhandlung can improve their CSR practices in terms of a general CSR framework in order to differentiate themselves and their product offer from their international competition. As described by Day and Nedungadi (1994), for companies in highly competitive markets, there is a necessity to differentiate their product offer which can be reached through CSR initiatives since these add value to offered products (Kemper et al., 2013) This is also supported by various studies, such as the APCO worldwide study (2004) which indicated that products could be marketed in a better way and a better product differentiation could be reached through CSR (Birth et al., 2008). According to

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Porter and Kramer (2011) CSR can be effectively used as a way of differentiation if it is integrated in the company’s corporate strategy leading to an alignment between economic and social objectives. In addition, this was supplemented through recommendations on how this can be communicated to their customers taking the country-of-origin effect into account in order to reach differentiation and address aspects of communication, which are specific to the German culture. As mentioned earlier, CSR can only be an adequate basis for differentiation if customers have knowledge about the point of differentiation (Deegan and Unerman, 2006).

Besides of the theoretical basis on which CSR is often used as way of differentiation, it is also a current issue which has been discussed in the media in recent years. While Amazon is a successful international operating company, it has been strongly criticized for its business practices and lack of social engagement in the last years (Gunther, 2012).

While the Mayersche Buchhandlung faces less opportunities and advantages than Amazon as an international company, the company shows a deeper commitment to CSR practices in comparison to Amazon. Based on this, CSR provides a solid basis for product differentiation for the Mayersche Buchhandlung in which it can exceed in comparison to its international competition.

1.3 Research questions

Based on the problem discussion the following main and sub research question have been formulated:

RQ1: How can CSR practices be improved by means of a CSR framework as a way of differentiation from international competition?

Sub-RQ2: How can CSR be communicated to customers in consideration of the country- of-origin effect in Germany?

1.4 Research purpose

Within this research two main purposes were fulfilled, which are divided according to both research questions. In combination, both research questions provide a solid basis on which the Mayersche Buchhandlung differentiates itself against international competitors.

First of all, this research aimed at the generation of a general applicable CSR framework on which basis a company’s CSR practices can be analysed and evaluated. This framework was aimed to be a comprehensive frame and supplement existing theory in this area as no common consensus or generally acknowledged framework currently

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existed. Therefore, existing knowledge was increased through this research study. Based on this, recommendations were provided with regards to how CSR practices of the Mayersche Buchhandlung can be improved in order to provide a basis for differentiation against international competitors.

Secondly, this study determined how to communicate a company’s CSR practices to its customers in consideration of the country-of-origin effect of Germany. Thus, an analysis of existing external communication practices with regards to CSR was conducted and evaluated on the basis of theory. Within this analysis traditional media as well as online media were examined as communication tools. Thus, this research provided a different theoretical basis considering the country-of-origin effect of Germany in addition to existing research studies in which online CSR communication is conducted in a country specific context. As a result, recommendations were given to the Mayersche Buchhandlung regarding how to communicate their CSR activities to their customers in consideration of the country-of-origin effect in Germany.

In general, this research study increased existing knowledge as it placed the research area in a new context, which has not been examined before. As mentioned earlier, extensive research has been conducted with regards to CSR practices and its communication in various nations and the retail sector. Nevertheless, no studies could be identified which examined these areas within the German book retail sector.

1.5 Delimitations

Certain delimitations occurred within this research study, which are described in the following section. First of all, the study was limited to a single case study with focus on the Mayersche Buchhandlung as this research was conducted in cooperation with the company. As a consequence, the examined research was placed in a specific context, which was, in this case, the German book retailing sector.

In addition, the examination of the company’s CSR practices and their possible improvements was limited to interviews with the company’s top and middle management and not all employees as these could provide insights into the company’s decision making processes.

Furthermore, a further delimitation occurred due to a focus on CSR communication which was aimed at customers. In general, companies communicate their CSR practices to several stakeholders, such as shareholders, employees and customers, next to others.

Nevertheless, the focus of this study lied solely on external communication towards customers as they were the target group that was mainly addressed within this differentiation strategy.

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1.6 Thesis outline

Figure 1: Thesis outline

•This chapter presents chosen research methods and their justification for the completion of the research study

Chapter 2: Methodology

•This chapter presents and discusses existing relevant theories with regards to the research questions

Chapter 3: Theoretical frame of reference

•This chapter accounts for all collected data during the research process in order to answer the research questions

Chapter 4: Empirical Evidence

•This chapter connects the empirical evidence with relevant theories discussed in the theoretical frame of reference

Chapter 5: Analysis

•The last chapter shows that research questions and research purpose have been answered and fulfilled

Chapter 6: Conclusion

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Methodology

In the following chapter an insight is provided into the research methods that were deployed in order to complete this research. Therefore, the following aspects are discussed: scholarly approach, investigation approach, data collection, data analysis, source critique and trustworthiness and authenticity.

2.1 Scholarly approach

Within the scholarly approach of this research study epistemological and ontological considerations are discussed followed by an applicable research strategy. The epistemological philosophy, which was followed within this research, is interpretivism as it differentiates between people and institutions within social reality and natural science models. Based on this, emphasis was placed on the nature of humans and the subjective meaning of phenomena within this research investigation (Bryman and Bell, 2011, Myers, 2013). In addition, ontological considerations define whether social actors are independent social entities with an external reality or whether they are a social construct of social actions and perceptions. A constructivist stance was taken within this research as it is believed that social phenomena are influenced by behaviour and actions of social actors (Bryman and Bell, 2011). The choice of scholarly approach influences all following choices regarding research methods as these are highly related to each other and as they need to be in line (Saunders et al., 2009). In accordance with these philosophical stances a research strategy was chosen. In general, a distinction can be made between quantitative or qualitative research strategies which provide a specific orientation within a research process and guides the choice of research methods in order to complete a research study (Bryman and Bell, 2011).

2.1.1 Research strategy

In the following paragraph a more detailed examination of the research strategy is given which is followed by a description of the applied research design within this study and a justification of chosen methods.

The followed research strategy was of qualitative nature which places emphasis on words instead of quantifications as proposed by a quantitative research strategy. The choice of research strategy was closely related to the problem area and research questions that have been investigated (Bryman and Bell, 2011). Within this study, CSR practices should be improved by means of a CSR framework as a way of differentiation from international competition as well as an investigation of how CSR can be communication towards customers in consideration of a country-of-origin effect in Germany. Hereby, rich and detailed information were gained within the specific research context in order to gain a deep understanding of the investigated research area (Bryman and Bell, 2011). As shown by former research, both quantitative and qualitative research strategies have been deployed. Nevertheless, it became also apparent that quantitative research strategies were predominant in comparative studies or studies involving an extensive sample size, such as Gjølberg in 2009, while qualitative research strategies were prevailing in single case

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studies or studies with relative small sample size as, for instance, Nielsen and Thomsen in 2009. This supported the adoption of a qualitative strategy within this research study due to a focus on a single case study research design, which took place in cooperation with the Mayersche Buchhandlung. Within this cooperation posed research questions were examined using the example of the Mayersche Buchhandlung. Case studies are commonly employed in business-applied research and due to the focus on one company an in-depth and detailed analysis of a single case could be provided. This is also based on the fact that quantitative research strategies aim at the generalization of research findings through which a bigger sample size would have been necessary. Furthermore, case studies are commonly associated with a qualitative research design, which results out of the fact that a case study makes it possible to use and combine several qualitative methods. As more than one data collection method was used within the research process, it was a suitable choice to follow a case study design (Bryman and Bell, 2011).

A typically criticized aspect of qualitative research is its difficulty to replicate due to its less structured character and its subjectivity. However, it can also be argued that research replication is rather atypical for business-applied research which is due to the specific circumstances in which businesses operate which makes replication in general problematic (Bryman and Bell, 2011). As mentioned earlier, qualitative research is considered to be subjective as a researcher’s judgment poses strong influence on the research process. This criticism was partially encountered with a deductive research approach through which observations and findings were based on previous theories and literature. This as well as a predefined research outline provided guidance to the reader and solid argumentation for choices made within the research process (Bryman and Bell, 2011). Additionally, a lack of transparency regarding procedures and choices made within research studies is another criticized aspect of a qualitative research strategy. Based on this, all choices and chosen methods within this research study were accounted for and according argumentation was provided to the reader (Bryman and Bell, 2011).

Furthermore, another main criticism in respect to a qualitative research strategy is also its limitations with regards to generalization as research findings are often only attributable to the research population itself and not beyond. Nevertheless, the generalization of research findings is not a main ambition of a qualitative research strategy or a single case study (Bryman and Bell, 2011). This goes in line with criticism regarding the provision of limited evidence through a single case study. Even though, findings are restricted to a single case it does not necessarily result in limited evidence. Additional criticism with regards to a case study design is that it is often viewed as preliminary research for quantitative research. Nevertheless, within this research the view was supported that the contribution and quality of a research is not diminished if quantitative research is conducted as a follow up research within this field. The further investigation of a research area provides further support and argumentation for the importance of the research topic.

2.2 Investigation approach

An investigation approach describes the relation between theory and research and makes a distinction between two approaches, namely deductive and inductive (Bryman and Bell, 2011).

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The chosen investigation approach within this study was deductive in which theory precedes observations and findings (Bryman and Bell, 2011). Even through, a deductive investigation approach is commonly applied in quantitative research strategies and an inductive investigation approach is predominately used in qualitative research strategies (Bryman and Bell, 2011), a deductive research approach corresponded better with a master thesis outline in which a thorough literature study is conducted in order to develop a basis for observations and findings (University-West, 2015). In addition, an inductive investigation approach is more suitable for research areas which have not been investigated by others yet (Bryman and Bell, 2011). While the focus of this research study still encompassed some research gaps, a considerable amount of research existed in these areas, which provided a theoretical basis on which further studies can be based on, for example research by Pedrini and Ferry in 2011 or Castelo Branco et al. in 2014. In correspondence with this investigation approach, a thoroughly literature investigation was conducted on which basis a qualitative research investigation took place.

2.3 Data collection

Within this research study secondary and primary data collection took place in terms of a literature study and empirical data collection. Both of which are discussed in the following paragraph and are divided among proposed research questions. Additionally, a justification of primary data collection methods is given at the end.

2.3.1 Secondary data collection

As mentioned earlier, a thorough literature study was conducted in order to provide a solid theoretical basis for the investigation of both research questions. This theoretical frame of reference was based on secondary data collection. Hereby, various topics have been covered, such as the definition of CSR, a CSR framework discussion and CSR as a way of differentiation. These research areas were chosen in accordance to research question one.

In a following step, theory concerning the second research question was investigated including external CSR communication, which covered general and online communication methods as well as the country-of-origin effect of Germany on communication practices. These topics were also chosen in accordance with the posed research question in order to derive a thorough understanding in this field.

The used literature was derived from scientific articles as well as scholarly books, which could be found in the Library of University West as well as through scientific databases, such as Emerald, ABI Inform or Science Direct. Herewith, a certain level of quality should have been ensured for the theoretical frame of reference.

2.3.2 Primary data collection

In addition, primary data has been collected in order to answer both research questions accordingly. In total, two data collection methods were used in order to fulfil this research, both of which provided an in-depth insight into the research areas.

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The first research question “How can CSR practices be improved by means of a CSR framework as a way of differentiation from international competition?” was investigated by means of semi-structured interviews. The semi-structured interviews were conducted with the Mayersche Buchhandlung and data regarding the company’s CSR practices and its integration into the company’s overall strategy were collected.

The second research question “How can CSR be communicated to customers in consideration of the country of origin effect in Germany?” was examined via semi- structured interviews and virtual company documents as general and online communication have been examined. The semi-structured interviews were conducted in order to collect data about the general CSR communication of the Mayersche Buchhandlung, while data about the online CSR communication of the Mayersche Buchhandlung were collected via the company’s website (www.mayersche.de) with focus on CSR dedicated pages and pages containing CSR information.

In the following section a justification of both research methods is given. In general, interviews are the most common form of data collection within a qualitative research strategy due to its less intrusive character in comparison to other data collection methods, such as observation as well as its flexible character (Bryman and Bell, 2011). This flexibility results out of the possibility to departure from topic guides through which an insight into the interviewee’s point of view should be generated. Nevertheless, more guidance is given in comparison to unstructured interviews as fairly specific topics might be covered (DiCicco‐Bloom and Crabtree, 2006). The choice to use semi-structured interviews instead of other qualitative data collection methods was also due to practical reasons. In the case of participant observation an enormous amount of time is needed for the observation itself, but also for the conduction of field notes and its analysis.

Furthermore, it is a very intrusive data collection method. Additionally, the option of a focus group has been eliminated as the sample consisted of company representatives from different ranks, which might have had influence on participant’s viewpoints and responses (Bryman and Bell, 2011, DiCicco‐Bloom and Crabtree, 2006).

As mentioned earlier, virtual company documents were used with the Mayersche Buchhandlung’s website (www.mayersche.de) as object of analysis. This type of data collection is also referred to as e-research, a research domain which became increasingly popular over the last years. Based on the fact that this data collection method is rather new, new approaches emerge at a fast pace (Bryman and Bell, 2011). The internet as a source for data collection provides many opportunities due to the ease of access of data and the amount of available data. This and the fact that CSR is increasingly communicated via corporate websites make it a popular source for data collection (Wanderley et al., 2008). Therefore, many studies in the area of CSR make use of website content and web site structure as unit of analysis as, for instance, Moreno and Capriotti (2009) or Castelo Branco (2014). Nevertheless, certain aspects need to be taken into account when data is collected via the internet. Crucial criteria are the authenticity and credibility of data that are derived from the internet (Bryman and Bell, 2011). As the data collection process within this study focused on the Mayersche Buchhandlung, data were solely collected from the company’s website, which can be regarded as authentic and credible.

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2.3.3 Sampling techniques

The sampling strategy that was followed within this research study is a purposive sampling, a form of non-probability sampling. Within this sampling approach interviewee participants were chosen in a strategic way in pursuance of a representative sample regarding top and middle management of the Mayersche Buchhandlung with involvement in CSR practices and CSR communication. Based on this, entities have been selected that might provide relevant insights into the research area of CSR practices and CSR communication (Bryman and Bell, 2011). A homogenous sample that shares critical similarities has been created, which provided depth and richness to the collected data (DiCicco‐Bloom and Crabtree, 2006). As a consequence, top and middle managers were chosen who are occupied in different company functions as they were directly involved in the decision making processes within the company. Furthermore, these participants were able to provide insights into the background of internal company processes.

Therefore, the decision has been made to conduct several face-to-face interviews with top and middle managers of the Mayersche Buchhandlung in order to get an insight into research question one, which focuses on the improvement of CSR practices as a way of differentiation from international competition. Based on this, interviews were conducted with the company’s CEO, the senior manager, human resource management, regional management, store management and marketing management, which also covers CSR. All participants could provide an insight into CSR practices from different perspectives due to their different company positions and areas of responsibilities.

Additional face-to-face interviews were conducted which solely focused on research question two. These aimed at the investigation of the company’s general CSR communication and the country-of-origin effect. Hereby, interviews have been conducted within marketing management and CSR, Public Relations and store management.

Hereby, an insight into the CSR communication practices has been generated from participants who were involved within the communication process in the company’s headquarters, but also in the book stores.

Significant criticism in respect to this sampling strategy refers to the fact that findings cannot be generalized beyond the scope of this research within a non-probability approach. Nevertheless, it can be argued that qualitative research sets greater focus on research context instead of generalization of findings, which is a quantitative preoccupation (Bryman and Bell, 2011). In addition, it can be said that the non-probable character of this sampling strategy inherited a bias in the sample as people were purposely chosen. Nevertheless, this also addresses the sampling technique’s main advantage as it enables the researcher to choose people who are most likely to contribute to the research area and the investigation (Tongco, 2007).

2.3.4 Encountered problems

A possible problem during this research study occurred during the data collection process.

As explained in more detail below under ethical considerations, the anonymity of participants is only partially given as a purposive sampling strategy was followed in which participants were selected based on their inherent company position. Nevertheless, all interviews were treated anonymously, so interviews cannot be directly matched to research participants.

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Another issue has been encountered during the data collection process with regards to interview guide one which examined a comprehensive CSR Framework. Based on the fact that interview questions covered various company areas, such as HRM, company logistics etc. not all questions could be equally well answered by all participants.

Furthermore, some participants chose to answer only questions within their company field/profession as their intention was to communicate one coherent company picture and to not question company decisions. Lastly, in one case it was only possible to cover one main area within research question one covering the integration of CSR within the company’s overall strategy due to time constraints from the participant’s side.

2.3.5 Ethical principles

Several ethical principles needed to be taken into account in the data collection process.

First of all, study participants have been informed about the study’s purpose. As this thesis was conducted in cooperation with the Mayersche Buchhandlung and data collection focused merely on the company’s CSR practices and communication, all study participants were informed and aware of the purpose of the study. Secondly, the participation in the research study needed to be voluntary. Each interview participant has agreed to contribute to this research study within a face-to-face interview. In addition, confidentiality of participants also needed to be guaranteed. Within this study a purposive sampling frame was used, which means that study participants were selected based on their company position. Nevertheless, interview transcripts were treated anonymously, so interviews responses cannot be matched with participants (University-West, 2015).

2.4 Data analysis

In a following step the chosen data analysis method is introduced as well as justified.

Hereby, the unit of analysis is also divided among the proposed research questions.

After data has been collected via semi-structured interviews and through the company’s webpage the data was analysed via qualitative content analysis. As already mentioned earlier, a deductive investigation approach was followed, which also influenced the data analysis as the structure of analysis was based on previous knowledge and theory. A deductive content analysis is considered to be particularly useful to test previous theories in a different context (Elo and Kyngäs, 2008), which made it an appropriate data analysis method for this research. Another advantage is that it could be used for both, interview transcripts and virtual company documents, which facilitated the integration of both data collection methods. Some criticism with regards to this data analysis method addresses its simplistic character, which has been addressed by Weber (1990) who argued that any method of data analysis can lead to simplistic results if the required skills are lacking (Elo and Kyngäs, 2008).

Within the process of content analysis words were coded according to predefined content related concepts and categories, which can also be referred to as thematic coding (Elo and Kyngäs, 2008, Bryman and Bell, 2011). Hereby, interview transcripts and printed website content were used in order to facilitate the coding process. Based on this, classifications

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were performed which are assumed to share the same underlying meaning. These classifications have been composed in terms of analysis schemes, which embodied the basis for the conducted qualitative content analysis. As a consequence, it was possible to identify whether the research outcomes were in line with the proposed analysis model and provide a basis to answer the research questions accordingly.

The unit of analysis of research question one covered several interview transcripts about the improvement of CSR practices by means of a CSR framework as a way of differentiation from international competition which were analysed in accordance to a prior developed coding scheme. For more details please see appendix I research question 1 coding scheme on p. 16. Furthermore, all coded interview transcripts and the composed analysis scheme can be found under appendix I research question on pp. 18-116.

In addition, an analysis of research question two also covered several interview transcripts with regards to general CSR communication as well as website content with focus on online CSR communication of the Mayersche Buchhandlung. These were analysed through coding schemes addressing general and online CSR communication as well as the country of origin effect. For more details please see appendix II research question 2 coding scheme on p.126. Additionally, interview transcripts as well as an analysis scheme regarding general CSR communication can be found under appendix II research question two on pp. 129-155, while the analysis scheme comprosmising website content with reference to online CSR communication is provided under appendix II research question two on pp. 156-199.

2.5 Source critique

Within this section the quality of used sources is evaluated and discussed. As mentioned above, secondary data was used in order to develop a basis for primary data collection.

Even though, secondary data provides a useful source for research, it also has some limitations. Based on the fact that secondary data has been collected for other research purposes it might put constraints on the research study as the data might not be perfectly suitable. Furthermore, the quality of secondary data cannot always be guaranteed as it has been collected by other researchers (Saunders et al., 2009).

Therefore, certain quality criteria were employed in the source selection. The theoretical basis for employed and discussed research methods was derived from scientific articles of peer-reviewed journals and from scholarly books. Thereby, a certain level of source quality should have been given as well as a solid theoretical basis. The same quality criteria were employed in the critical literature review, which was mainly based on scientific articles from peer-reviewed journals as well as primary sources from international renowned organizations, such as The World Bank or The International Chamber of Commerce.

However, in the introduction of the study various sources have been deployed in addition to peer-reviewed scientific articles and scholarly books, such as various online sources.

First of all, online business dictionaries have been used in order to define and introduce business concepts in an according manner. In addition, another source has been company website content as a way to provide company background information to the reader.

Furthermore, online newspaper articles have been examined with regard to a

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demonstration of the currency and relevance of the business problem. These sources are not scientific and therefore, caution needed to be given in their usage (Bryman and Bell, 2011). Nevertheless, they provided a useful source for the background of the study in addition to scientific sources.

As mentioned above, sources for primary data collection were semi-structured interviews with top- and middle management from the Mayersche Buchhandlung and the company’s CSR-related website content. In general, the authenticity of online sources is questionable (Bryman and Bell, 2011). Nevertheless, the sole online source for primary data collection was the company’s website, which can be regarded as authentic and credible data source.

2.6 Reliability and transferability

The quality of a research can be assessed by means of various criteria which are chosen in accordance to the employed research strategy. Based on the qualitative nature of this research it was assessed among two main criteria, namely reliability and transferability (Bryman and Bell, 2011). Both of which are discussed in the following section.

The first criterion reliability consists of two sub criteria called internal and external reliability. In accordance to research conducted by LeCompte and Goetz (1982) these criteria have been adapted to a qualitative research design. While internal reliability discusses whether agreement prevails among several researchers involved in one study about what they see or hear, external reliability describes the extent to which a study can be replicated (Bryman and Bell, 2011).

First of all, within this research the criterion of internal reliability was not applicable as only one researcher was involved within the research process (Bryman and Bell, 2011).

Based on this, internal reliability is not going to be discussed further. However, external reliability could be considered within this research. In general, the replication of studies within a qualitative research strategy might be challenging as it is often difficult to replicate social settings in an according manner (Bryman and Bell, 2011). This was also an issue within this research design as a single case study has been followed through which an insight into a specific social setting is given. Even though, external reliability is limited within this research, detailed accounts were given for all involved processes and decisions within this research study. As a consequence, external reliability has been enhanced in so far that other researchers can follow described practices.

The second criterion transferability was developed by Guba and Lincoln (1994) and belongs to a major criterion called trustworthiness. Transferability addresses whether findings of a study can be transferred to another context (Bryman and Bell, 2011).

Transferability also addresses contextual issues and can therefore be related to the above mentioned issues in which emphasis is placed on an in-depth insight within specific research contexts. This is enhanced through small sample sizes and a research focus on smaller entities, which was also given within this research. Hereby, a purposive sampling was conducted with emphasis on top and middle management of the Mayersche Buchhandlung (Bryman and Bell, 2011). Nevertheless, Guba and Lincoln (1994) refer to Geertz (1973) concept of thick description as a way to evaluate transferability within a

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qualitative research design. Within thick description detailed accounts of a culture should be provided in order to facilitate judgments about the transferability of a research (Bryman and Bell, 2011). Based on this, rich and detailed accounts of the research contexts were given within this research process as it enhanced the research transferability. In this case, this was even facilitated though a single case study design.

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Theoretical Frame of Reference

3.1 Choice of collection of literature

The literature search process developed from a general topic examination with focus on CSR to more specific branches of theory with focus on CSR frameworks, CSR differentiation, CSR communication (general and online) and the country-of-origin effect. Therefore, used key words or search terms evolved over the literature search process from more generic terms, such as CSR plan, CSR measurement to more specific terms as, for instance, CSR differentiation, CSR assessment. This also occurred with regards to the second research question in which CSR communication in general was used as a key word, which then got specified to CSR online or website communication or communication and the country-of-origin effect. According theories and articles were found through Google Scholar and the library of University West.

The aim of the literature search was to identify applicable and relevant theories in order to answer both research questions, so the literature search was at times very specific.

Therefore, problems in the literature search occurred mainly during the intervals in which specific information was sought and could not be easily identified. An example is theory with respect to the German country-of-origin effect on CSR as many studies placed focus on a different nation or culture. Hereby, literature about the country-of-origin effect of Germany could only be identified among comparative studies, which mainly made use of a quantification of Hofstede’s cultural dimensions.

The extent of the choice of theory was chosen in accordance to the two proposed research questions. Based on the fact that research question one examined “How can CSR practices be improved by means of a CSR framework as a way of differentiation from international competition?” the decision has been made to define CSR in order to specify what it encompasses. In addition, more recently proposed and general CSR frameworks have been reviewed in order to develop a suitable framework as a research basis. Lastly, the way in which CSR can be used as a way of differentiation was examined through which focus was placed on the integration of CSR into the company's strategy. Therefore, all crucial aspects of research question one were covered through theory. Several fields have also been examined with regards to research question two: “How can CSR be communicated to customers in consideration of the country of origin effect in Germany?”, such as general CSR communication as well as online CSR communication. Within general CSR communication CSR communication elements and message content were evaluated, while online CSR communication focused on website structure, website content and message content. Lastly, the country-of-origin effect on CSR communication in Germany was examined, so all aspects of the second research question were also covered through a theoretical basis.

The choice of theory was based on its relevancy and its applicability within this research study. Therefore, focus has been placed on general CSR frameworks instead of recently developed CSR framework as their focus extended the scope of this research. Hereby, various applicable theories have been compared and combined, such as Pedrini and Ferri (2011) and Chan et al. (2014) in order to develop an exhaustive framework. In addition, the theoretical basis for CSR as differentiation was provided by Porter and Kramer (2011), because of the company perspective with emphasis on a long-term focus that is

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taken within this research. In this area three main studies were used as a guideline on how to implement CSR into a company's overall strategy. These theories are provided by Lantos (2001), McElhaney (2007) and Pedrini and Ferri (2011) in that they propose detailed approaches within this area which made them easily applicable.

Within the second research question theory with regards to general CSR communication focused on research conducted by Birth et al. (2008) who provided theory regarding CSR communication elements. Hereby, additional literature provided by Pomering and Dolnicar (2009) or Dawkins (2005) was used as they provided further aspects within the area of general communication. In addition, CSR communication message content was examined in accordance to research proposed by Fill (2011) as he provides detailed accounts within the analysis of message content. The theory in connection to online CSR communication was divided among website structure and website content. Most studies only placed emphasis on website content, but research conducted by Castelo Branco et al. (2014) also investigated CSR-related website structure. However, three studies in total have been compared in order to provide a comprehensive insight, namely research by Castelo Branco et al. (2014), Wanderley et al. (2008) and Moreno and Capriotti (2009).

These have been chosen as they show similar attempts in their research studies.

Additionally, online CSR communication also entailed theory with respect to message content as proposed under general CSR communication through theory provided by Fill (2011). Based on this, messages from general and online communication could be evaluated on the same theoretical basis.

Lastly, the theory choice with regards to the country-of-origin was based on its applicability as all other studies with focus on Germany used quantifications which were not applicable within this study, so emphasis was placed on research by Auger et al.

(2007), which provides a rank order of social issues in Germany.

3.2 Critical literature review

In the following section a critical literature review is provided which is divided among the main research questions. Research question one covers the definition of CSR, CSR frameworks and CSR as differentiation. Research question two provides an insight into general CSR communication, online CSR communication and the country-of-origin effect of Germany.

3.2.1 Research question 1: How can CSR practices be improved by means of a CSR framework as a way of differentiation from international competition?

Definition of CSR

Various definitions of Corporate Social Responsibility (CSR) can be found within the literature as no consensus exists about what CSR encompasses. One definition is provided by the European Commission, which was developed in accordance to a new CSR strategy:

“the responsibility of enterprises for their impacts on society” (The-European-

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Commission, 2011, p.1). The International Chamber of Commerce (ICC) also proposes a very simple CSR definition, which is derived from a business perspective: “the voluntary commitment by business to manage its activities in a responsible way” (The- International-Chamber-of-Commerce, 2002, p.4). Both of which are definitions provided by internationally renowned organizations and provide guidance to businesses in Europe, but also to businesses around the world. It is worth to note that the European Commission has significant influence on Germany, which might be an important aspect within this study. However, there are also more comprehensive definitions of CSR, which were developed from a theoretical stance.

According to Gjølberg (2009) one of the most commonly cited definition was given by Carroll in 1991, who defined CSR as economic, legal, ethical and philanthropic responsibilities of a company or as he summarized it: “The CSR firm should strive to make a profit, obey the law, be ethical, and be a good corporate citizen” (Carroll, 1999, p.22).

Alternatively, the World Business Council for Sustainable Development defines CSR as:

"Corporate social responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large."

(The-World-Business-Council-for-Sustainable-Development, 1998, p.6).

Within this study, the decision was made to make use of a more specific definition of CSR than provided by the European Commission or ICC as it should have provided guidance regarding what CSR encompasses within the research process. Nevertheless, the stance of the ICC was taken regarding that CSR embodies a voluntary commitment (The-International-Chamber-of-Commerce, 2002). This is based on the fact that in Europe CSR is generally regarded as a voluntary activity that goes beyond the requirements of laws as stated by the European Commission. Even though, this is not included in the CSR definition provided by the European Commission, it is clearly communicated via their policies and therefore, applied to this research study which focuses on the German book retailing sector (The-European-Commission, 2014). As mentioned earlier, Carroll’s CSR definition is widely accepted among researchers, but it is also very complex which made it difficult to incorporate within this study. If this definition was followed the company’s economic, legal, ethical and philanthropic responsibilities needed to be examined (Carroll, 1999) which exceeded the scope of this research and was not in line with the research objectives. While the CSR definition of the World Business Council for Sustainable Development incorporates ethical and economic business considerations as well as a responsibility towards employees, the local community and society, it addresses workforce families as separate entity (The-World- Business-Council-for-Sustainable-Development, 1998).

Nevertheless, within this research this group was not addressed specifically as they are part of the local community or society as a whole, so the CSR definition was adopted towards:

“Corporate social responsibility is the voluntary and continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce as well as of the local community and society at large.”

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An applicable CSR framework

Numerous approaches exist on how to measure CSR practices and their performance. In the following section several CSR frameworks will be evaluated in order to identify the most suitable one. Hereby, recently developed frameworks will be examined which is followed by a discussion about general CSR frameworks.

Recent CSR frameworks

A more recent approach in the determination of CSR measurement is the inclusion of social factors within the structure of the Balanced Scorecard developed by Kaplan and Norton (1992). The Balanced Scorecard is a management tool through which a company’s strategy, mission and vision gets translated into objectives covering four main areas, such as financial, customer, process and growth. Some researchers, such as Epstein and Wisner (2001) and Kaplan and Norton (1996), argued that more social indicators or perspectives can be added to the original framework if these prove to be important to a company.

Nevertheless, no specific framework was provided by these authors with regards to how it should be done (Panayiotou et al., 2009). One attempt to include CSR within this framework was proposed by Panayiotou et al (2009) in which CSR is incorporated in the organizational strategy through which important CSR measures should be defined, measured and controlled (Panayiotou et al., 2009). Another approach which also made use of an existing framework in order to incorporate CSR was proposed by Kumar and Balakrishnan in 2011. The emphasis of their study lied on a framework developed by the European Foundation for Quality Management or also referred to as EFQM Model which focusses on operational excellence. The research objective was to identify the best practice in CSR through the usage of the EFQM model (Kumar and Balakrishnan, 2011).

In general, both models embodied alternative approaches to measure and improve CSR practices, both of which showed a lack of applicable measurement criteria. While the EFQM framework was more comprehensive in comparison to the Balanced Scorecard, both models also covered and emphasized aspects which exceeded the scope of this research.

General CSR frameworks

Therefore, an examination of frameworks will follow, which solely focuses on the area of CSR. Within this area various frameworks have been proposed among studies regarding how to measure CSR practices accordingly, so a framework was selected which is generally applicable, but also suitable to the study context (Gjølberg, 2009).

Based on the fact that CSR is a very wide concept and its definition varies among researchers, it was divided among its main categories, namely company transparency and accountability, HRM, company logistics, environment and communities. These concepts have been identified among several studies due to their applicability within this research and will be explained in further details below.

The first aspect includes company transparency and accountability through which the availability of information was examined according to various concepts, such as the disclosure of sustainability reports, the provision of website content and disclosure of

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corporate objectives or policies regarding CSR. Within this category concepts from two studies have been taken as both of which provided different but important aspects within company transparency and accountability (Pedrini and Ferri, 2011, Chan et al., 2014).

This aspect of CSR is increasingly important as companies and society pay more attention to the availability of CSR information nowadays (Turker, 2009).

Another crucial aspect in CSR is Human Resource Management or referred to as HRM due to an ongoing commitment from a company towards its workforce which is also addressed within the chosen CSR definition (The-World-Business-Council-for- Sustainable-Development, 1998). Therefore, various aspects within HRM were investigated, such as the promotion of employee’s well-being/ health and safety, the improvement of tangible/physical working conditions, the improvement of mental/intangible working conditions/environments and training and development (Chan et al., 2014). All of these concepts have been derived from a study conducted by Chan et al., (2014) who provided a detailed and practically orientated approach with regards to HRM. Hereby, the chosen HRM concepts can be segmented further, for more details please see appendix I research question 1 coding scheme on p.16. Other studies also examined the aspect of HRM within their study, such as Turker in 2009 or Pedrini and Ferri in 2011 in which they placed emphasis on the implementation of complete HRM programs. A better insight into the CSR practices of national operating companies could be derived through the examination of various initiatives within this area as their likelihood of implementation is bigger.

Followed by that were considerations about company logistics, a category introduced by Pedrini and Ferri (2011) which covers whether a company tries to reduce the environmental impact of transportation, makes use of environmental packaging or takes social/environmental criteria into account in their supplier selection. According to the study of Pedrini and Ferri (2011) these criteria belonged to separate categories, which have been merged and adopted to this study. Nowadays, increasing attention is placed on the company’s supply chain and logistics as companies are part of networks which become increasingly important.

The fourth category which found consideration in this study was called environment and was also developed on the basis of several categories from different studies. While Pedrini and Ferri’s (2011) concept is rather general and contains energy and water efficiency as well as waste reduction, Chan et al. (2014) developed a much more detailed approach covering two categories. Within this research the decision has been made to use three main concepts, such as environmental management/ protection, energy management and waste management. Hereby, all proposed aspects of Pedrini and Ferri (2011) are followed as water management will be covered through environmental protection/ management.

Nevertheless, it made it also possible to follow a detailed approach as proposed by Chan et al. (2014). This facilitated the evaluation and analysis process within this research as several sub concepts could be defined among these main categories, which can be found in appendix I research question 1 coding scheme on p. 16.

Lastly, an examination of CSR efforts with regards to communities was taken. This category has been chosen as it goes in line with the proposed definition of CSR applied within this research as it addressed a businesses’ commitment to society and its local community. Hereby, focus was placed on selected concepts within the CSR framework of Chan et al (2014) as these are also covered through the study of Pedrini and Ferri (2011). Therefore, the investigation focused on community development/ partnerships,

Corporate Social Responsibility as differentiation from international competition